Category: News

In recent months the European Union has been investigating EU Member States citizenship by investment schemes.

When the Maltese and Cypriot schemes were first introduced, they faced controversy relating to the very direct way in which they were pitched. However, as time has passed, the scepticism of the European Commission and Parliament has not eased.

On 30th May 2018, Malta Today reported that, “European Commissioner Violeta Bulc said the commission was working on a study of citizenship and residence programmes in all member states”. Reports like this can take several years, but it is a clear indication that the EU is concerned about passport programs and wants to find a way to limit or end their use.

These concerns were not helped when a Maltese journalist and blogger, Daphne Caruana Galizia was murdered in October 2017. Since then there has been significant focus on the stories she was working on, including related to Malta’s Individual Investor Programme, known as IIP and the relationship between the government, it’s main Ministers and Henley and Partners.

The combination of renewed reporting of stories by the Daphne Project, lead to reporting and stories like this that have made Henley and Partners and Malta’s government look very bad around the world. Whilst this may all pass, the European Parliament has shown itself to be very concerned and is taking the EU citizenship by investment situation very seriously indeed.

The reality, as displayed when the passport schemes were launched, is that under current rules the EU has minimal powers to oversee the action of European Member States in this area. Naturalisation is considered to be a Member State competency and so the EU has few rules or authority to apply. It is possible that twenty years from now the EU will have been able to change this situation, but in the coming few years, there is very little that Brussels can do to enforce it’s will on individual nations, even those as small as Malta and Cyprus.

In October 2017 the Australian government was forced into crisis when the ruling party lost several important MPs – and it’s majority.

Why?

It has recently emerged that it is not possible to be an Australian Member of Parliament and a citizen of another nation. That much sounds logical enough. However, some of the MPs involved were not dual citizens and simply had the right to be one.

The most important name that this applies to was Deputy Prime Minister, Barnaby Joyce. His father was born in New Zealand, meaning that he has the right to both New Zealand and Australian dual citizenship, even though he admitted that he was unaware of this right. A recent High Court ruling has made this theoretical right a problem, unless the subject has taken “reasonable steps” to renounce their citizenship. Needless to say, since he was unaware that he had the right, he had not tried to renounce it.

This situation highlights the importance of citizenship in many areas of life. Dual citizens can receive additional rights, but they sometimes come with additional responsibilities. More likely than this situation is that a citizen has a national service responsibility or additional taxation liabilities or voting rights. This also highlights how seriously first world governments take issues such as naturalisation.

It ought to be highlighted just how unusual this situation is. In a normal business transaction or contract, for example, both parties need to agree on the terms of an arrangement before the contract is binding. In this example, the individual had not applied for citizenship and there is no guarantee that the New Zealand government would have granted it. In other words, neither party had taken any action, but the outcome was still considered to be in place and binding as if they had done so.

In other words, it is important to investigate your situation carefully before taking any steps towards either dual citizenship or citizenship by investment.

Typically, the area of citizenship is relatively slow moving. It is rare for there to be a major event or law change that has an impact, or even makes the news.

However, on 23rd June 2016 this changed. The people of the United Kingdom voted by a slim margin to leave the European Union.

In advance of this vote, many concerned people that might be impacted by a leave vote had begun to investigate the legality of their situation.

As a citizen of the European Union, anyone from an EU Member State has the legal right to live and work in any other EU Member State. This is a core principle of the EU.

However, there are many people that are now finding that their legal right to live and work where they do may be compromised.

For example, it is estimated that there are 1 million EU citizens living in London. Should the UK decide that these people need to leave the city, it is impossible to imagine that anything other that economic chaos will follow. One million people moving away would devastate any real estate and rental market and have a serious impact on the local job market, but many firms would suddenly find themselves with such an acute labour shortage that they may not be able to continue to trade.

In the other direction, there are estimated to be 4.9 million British citizens that live abroad. Many of these live in another EU Member State and their status may be impacted. Your author, for example, has lived in Malta, a small island in the central Mediterranean Sea, for five years. I will begin the process of applying for permanent residency in the coming days.

It is easy to imagine that the rather sleepy world of residency and citizenship applications will be overrun by the sheer volume of applicants in the coming months. Typically, the application process is one that takes several years, but there will be so many people under pressure to obtain the correct documentation that these rules will almost certainly need to be revised, both in the UK and the rest of the EU.

Update: Details of this situation starting to unfold were published in May and June 2018. As this link and this link show, the number of British citizens granted naturalisation in Germany went from 622 in 2015 to 7,493 in 2017! Growth of these proportions must be putting the German passport offices under considerable strain.

In November 2018 the Maltese government released details of the increasing numbers of UK applicants. With no numbers to back it up, your author has noticed what feels like more British people than usual arriving and looking for igaming jobs.

Since the legal right to live and work in a location is so fundamental, there will be many employers in a panic at the moment. Smaller businesses will have many key employees that may now need to move away and so putting the resources in place to assist these staff will become a priority. One would imagine that lawyers with a specialisation in citizenship law ought to have a bumper few years of work.

How Will Governments React?
Within EU policy circles it has long been accepted that there simply are not enough skilled people in the workforce for the number of available positions and that this situation will intensify over the coming years. This is known as the war for talent.

It seems obvious that losing one million or more from the workforce of a country will exacerbate this situation. However, Germany is already considering raising the stakes by making EU passports available to British young people. If such a scheme were to become a reality it might have the impact of creating a double brain drain from the UK, as large numbers of UK and non-UK citizens might leave the country.

The range of rights that people might lose are very concerning. Such as the right to reside, to own property, to health care, and education for children, as described by High Q.

Whatever happens, the Brexit negotiations look set to be a defining moment for a generation of British and European businesses and their staff and an almighty headache for civil servants involved in the processing and granting of official documents.